Old Mutual (OMU) appears to have come through its fundamental restructuring in fairly good shape, although weak market conditions saw funds under management slip 3 per cent to ZAR1.044bn (£55.8m) at the December year-end. The managed separation included the successful un-bundling of 32 per cent of Nedbank, leaving it with a holding of 19.9 per cent.
Results from operations of ZAR9.96bn were 4 per cent down from a year earlier, reflecting net reserve movements and mortality losses in personal finance, which meant that adjusted headline earnings dipped by 11 per cent.
Trading conditions remained tough, and earnings were also dented by a drop in investment income from ZAR94.2m to ZAR20.5m. On the plus side, it delivered ZAR750m of cost savings, well on the way to achieving its efficiency savings target of ZAR1bn.
On the personal finance side, lower than inflation average salary increases as well as fuel and VAT rises eroded consumer disposable income in South Africa. This led to a number of initiatives including the repricing of guaranteed annuity products and a loyalty programme, but results from operations were still down by 36 per cent, while net client cash flows dropped by 29 per cent.
Results from operations in insurance underwriting grew by 28 per cent to ZAR670m thanks to a benign claims environment and better cost control, although organic growth was held back by slower-than-anticipated business volumes.
| OLD MUTUAL (OMU) | ||||
| ORD PRICE: | 112p | MARKET VALUE: | £5.52bn | |
| TOUCH: | 111.5-112p | 12-MONTH HIGH: | 138p | LOW: 102p |
| DIVIDEND YIELD: | 5.6% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 158¢ | SOLVENCY RATIO: | 170% | |
| Year to 31 Dec | Gross premiums (£bn) | Pre-tax profit (£m) | Earnings per share (¢) | Dividend per share (¢)* |
| 2014 | 3.21 | 1.36 | 13.5 | 8.7 |
| 2015 (restated) | 3.59 | 1.20 | 11.7 | 8.9 |
| 2016 (restated) | 3.73 | 0.31 | 3.50 | 6.1 |
| (ZAR)bn | (ZAR)bn | ¢ | ¢ | |
| 2017 (restated) | 72.32 | 7.12 | 305 | - |
| 2018 | 78.73 | 8.45 | 788 | 117 |
| % change | +9 | +19 | +159 | - |
| Ex-div: | 28 Mar | |||
| Payment: | 29 Apr | |||
| £1=ZAR18.72 *Not including special cash dividend of 100¢ paid on 16 Oct 2018 | ||||
